Why It’s Essential to Know Your Competition
Tips that will help you explain your venture’s competitive advantage.
Tips that will help you explain your venture’s competitive advantage.
Originally posted on Inc.com.
It’s been rumored that during the recording sessions of Thriller, Michael Jackson hung up posters of Prince. Michael was pushed by his contemporary to create the best work of art he could — because he knew his rival would be doing the same. As an entrepreneur I understand that you have a lot on your plate such as building a product, hiring talent, and iterating on the vision of the company. But, there is a key understanding that I am surprised to see that seed and Series A founders don’t have a great handle on how do you stand up against competition.
I’m pretty disappointed in founders and question their credibility in succeeding in an industry when they don’t have an answer to “How do you compare to your competitors?” The following are 3 pointers I have for answering this question when speaking to a venture capitalist.
The answer is never “I have no competitors.”
Competition can come in different shapes and sizes but as a startup founder, it always exists. Even if you are creating a new industry through your startup, you should answer the question by stating who the legacy providers are. You should provide a clear picture of who your target customer uses to provide a similar or not so similar solution as yours. This could be a legacy provider that has been around for decades or another startup that is attempting to address the same problem. But if you are creating a new market the question you should answer is what activities are your target customers doing now to solve the pressing problem your startup will solve. Many entrepreneurs don’t think about the status quo as a key competitor. Sometimes your biggest competition will be to shift consumers or enterprise customers from using other people or an inefficient spreadsheet.
For the last two pointers check out the original article on Inc.com.
Earnest Sweat is an Entrepreneurial Engineer for Camelback Ventures and Investor in Residence for Backstage Capital. If you have any questions or requests please connect with Earnest through LinkedIn, Twitter, or AngelList.